Innovative firms in knowledge-rich areas outperform all others in productivity.
The study looked at how a company's productivity is affected by its innovation level and access to external knowledge. They used data from Swedish firms and a method called Nearest Neighbour Matching to analyze the impact. The results showed that innovative firms in high knowledge areas are more productive. Surprisingly, non-innovative firms in high knowledge areas can also be more productive than innovative firms in low knowledge areas. This challenges the idea that only innovative firms benefit from being close to sources of complex knowledge. The study also checked the assumptions of their analysis method and found hidden biases could influence the results.